5

I’m on my way from Florida to the Pacific Northwest. I don’t mean I’m about to set out. I mean, right now I’m in a plane flying across North America from Orlando to Seattle. This in-flight WiFi lark is quite wonderful.

There are some other technological inventions that make long journeys more bearable. There’s podcasts, of course. I’m catching up on all the audio I’ve been huffduffing and there’s some truly wonderful stuff in there.

Then there’s the Kindle. Having a choice of reading material packed into a small but comfortable to read device is extremely convenient. Mind you, for take off and landing, you’ll still need a nice slim non-electronic book, such as Erin’s marvelous The Elements of Content Strategy.

But for all of its convenience, some things about the Kindle really stick in my craw.

First of all, there’s the DRM. It’s utterly, utterly pointless and may even be infringing copyright by violating the right of first sale—remember kids, copyright isn’t just about protecting the rights of the content producer; it’s about the rights of the consumer too.

Then there’s the pricing. There are some books I’d really like to buy right now. I’ve got my credit in my hand, ready to hand my money over to Amazon, but then I see that the Kindle edition costs more than the paperback. Often, the Kindle edition is closer in price to the hardback. That’s just not right—or even if it is “right” for economic and legal reasons, it doesn’t intuitively feel right to me, the potential customer.

I want to love books, but if the publisher treats them merely as interchangeable units, where the details don’t matter so long as the bits, the “content”, is conveyed as cheaply as possible, then we may be falling out of love.

The Kindle is a great lightweight reading device that’s particularly handy for travelling with—and the 3G version provides an almost miraculous permanent internet connection without any monthly contract—but the Kindle ecosystem, for all its Whispernet wonderment, is kind of nasty.

Now Amazon have decided that this ecosystem will not include third-party additions like Lendle. Even nastier.

I’m at An Event Apart in Boston where Jared is kicking things off. He’s pinch hitting for Eric who can’t be here, alas. (Do you like the way I’m casually using baseball references like pinch hitting to ingratiate myself with the local audience?)

Jared’s talk is entitled Revealing Design Treasures from The Amazon and I’m guessing he’s not talking about the South American river. He begins by talking about milk. Two years ago, you could buy Tuscan whole milk on Amazon. The reviews are hilarious. Jared reads an over-the-top literary travel piece to everyone’s amusement. Another review is written as a romance novel. Another is written as Coleridge’s Kubla Khan. Another is in the style of a rock music review. Some of the shorter ones are hilarious too, Okay product, but you have to buy a glass to use it.

Here’s a comment that comes up at lots of planning meetings, I like the way that Amazon does this, why don’t we do it like Amazon? People don’t say that about QVC. What’s so special about Amazon? Well, for a start, it’s a very, very popular and successful site. Jared quotes the stats. But there are other little things that are almost invisible but are very appealing. For example, the search results tell you when something will be delivered—most sites provide this information on the product page, but not on the search results page. They also keep iterating lots of subtle little things like the add to shopping cart button. So it’s understandable that people want to do things like Amazon. But to do that, you need to know exactly what it is that Amazon does. Jared will now reveal all. Jared has spent a long time watching people shop on Amazon.

It all starts with the content. In the case of Amazon, that’s reviews. People read reviews on Amazon and then sometimes buy the product somewhere else. Amazon knows this and they’re okay with that. Jared compares two reviews of a Harry Potter book. One talks about the content of the book, another talks about the experience of getting the book delivered from Amazon.

As more and more reviews get added over time, quality reviews get pushed down the page. This isn’t good because reviews are so critical to purchasing decisions. Amazon solved this problem with a small, simple device. They added a little question, Was this review helpful to you? This small addition gained Amazon approximately 2.7 billion dollars in revenue. That vital little feature was rolled out without much fanfare. With that extra data, people can now view most valuable reviews, least valuable reviews, etc. It turns out that the only people who want to see reviews ordered by date are the author of the book and the people who wrote the reviews. It’s just not that valuable for customers.

For a lot of products, such as alarm clocks, you’re only going to write a review if you have a negative experience. How does Amazon get people to write reviews? Most people don’t leave reviews. About 0.7% of people who buy something leave a review. But because Amazon has such a huge amount of customers, that equates to quite a lot. So the next time someone says, we should have reviews; that works really well for Amazon, you can respond with sure, we should have customers too; that works really well for Amazon.

Frankly, review writers are the lunatic fringe of customers …and you need to encourage that lunatic fringe. This is what the discussions, listmania, and customers ultimately bought.. features try to do. Some of these ideas and experiments work but some of them don’t.

Remember the Amazon gold box that would wiggle at you from the top of the page? The idea was to show people products in a “treasure chest” to encourage people to buy those products. The goal was to let people know about all the other stuff that Amazon sells; they already know from your shopping history what you know about so they specifically showed you stuff you didn’t know about. People got really frustrated with this. People wanted to see things they were likely to want to buy but that wasn’t the goal of the gold box. After a while, people stopped clicking on the gold box.

Amazon added tags. Two of the most popular tags are book and dvd. Those aren’t very useful for navigation. Neither is a tag like not interested but people use that tag a lot.

One of the products Amazon sells is an ethernet cable selling for $500. Boing Boing picked up on this. People starting havig fun with the tags for the ludicrously overpriced product; snakeoil, IQ test, waste of money, etc. Well, try clicking the waste of money tag; there’s a lot tagged with that. Why would Amazon allow people to tag their products in this way? The tag defective by design is a protest tag for anything that uses DRM.

Here’s the lesson. If your people are saying we should be more like Amazon, that should really mean don’t fear new ideas. Experiment. Some experiments don’t work. Know when to drop the ones that aren’t working; you’ll need a good metrics system to know what’s working.

There are also lessons to be learned from the experience of using Amazon. Notice that they don’t ask you to log in with your password until you absolutely need to. That really matters. Some customers never need to give their password. Amazon has amazing security levels that they’ve put a lot of effort into:

Amazon doesn’t know who you are (no cookie).

Amazon knows you from a cookie—you can receive recommendations.

Amazon wants to reveal something only you should know (password required).

There was a lot of negotiations with credit card companies to make the purchasing experience as good as it could be.

This is all about increasing Goal Time and reducing Tool Time. Struggling with security and remembering passwords is Tool Time. Finding the product that’s right for you is Goal Time.

Every time Amazon changes something, they are dabbling in changing the Tool Time. Amazon has changed a lot of over time. But most people don’t notice because the redesign happens slowly over time. This is in stark contrast to, say, Facebook’s sudden redesign. People don’t like it when things change suddenly. Amazon doesn’t have that problem even though it is constantly changing. Most users didn’t even notice when the mega dropdown was replaced with link list navigation. Here’s how they rolled it out:

Show the new design to 5000 non-cookied visitors per day. That means switching on the new design for 45 seconds. These non-cookied visitors are the least risky; they haven’t visited Amazon before.

After three weeks of that, show the new design to 1 in 5 non-cookied customers.

After another three weeks, show 5000 cookied customers the new design.

Show 1 in 5 cookied visitors.

Show everyone.

That’s twelve weeks to roll out one change.

Search can be hard. How do you find the first Tom Clancy book to feature Jack Ryan? How do you find an inexpensive but high quality SLR camera? How do you find a good toy for your six-year old niece? How do you find all the novels by Nobel Prize winning authors?

Let’s say your new to Salsa music and you want to get the best Salsa artists. First you have to limit your search to music to avoid getting food products. Even then, you get greatest hits albums but you don’t know who the artists are. CD Baby handles this better than Amazon because they have curated content.

Finally, never forget the business. Jared will now share the secret of Amazon’s business.

You can buy an iPod nano on Apple, Best Buy, etc. for about $149. Amazon sells it for $134. That’s probably cost price. It turns out that Amazon can sell almost everything at cost price and still make a product because of volume. It’s all down to the Negative Operating Cycle. Amazon turns over its inventory every 20 days whereas Best Buy takes 74 days. Standard retail term payments take 45 days. So Best Buy is in debt between day 45 and day 74. Amazon, on the other hand, are sitting on cash between day 20 and day 45. In that time, they can invest that money. That’s where their profit comes from.

You have to start with a great business model to produce a great experience.

Amazon’s API was one of the first I ever messed about with, first on The Session and later on Adactio Elsewhere. There are things I really like about it and things I really dislike.

I dislike the fact that there’s no option to receive JSON instead of XML. However, one of the things I like is the option to pass the URL of an XSL file to transform the XML (I wish more APIs offered that service). So even though JSON isn’t officially offered, it’s perfectly feasible to generate JSON from the combination of XML + XSL. That’s what I did for the Huffduffer hacking—I find it a lot easier to deal with JSON than XML in PHP5. If you fancy doing something similar, help yourself to my XSL file. It’s very basic but it could make a decent starting point.

But the thing I dislike the most about the Amazon API is the documentation. It’s not that there’s a lack of documentation. Far from it. It’s just not organised very well. I find it very hard to get the information I need, even when I know that the information is there somewhere. Flickr still leads the pack when it comes to API documentation. Amazon would do well to take a leaf out of Flickr’s documentation book (hope you’re listening, Jeff).

Amazon is selling MP3s. Right now it’s US only (and I’ve got a sneaky US account on the side) but hopefully this will reach foreign shores before too long. Straight out of the starting gate, they’ve got about 2 million songs on offer. Every single one of those songs is encoded at 256kbps with no DRM. It’s that last detail that makes this such a big deal.

I’ve never been able to get my head around the justifications for DRM. In the past, I have been literally sitting in front of my computer with my credit card in hand, eager to spend money on music I love. But rather than greet me with open arms, services like iTunes instead treat me with suspicion, demanding that they get to call the shots about how I can use music that I’ve bought.

All tracks used Windows Media DRM, and therefore were only playable under Windows and on WMA-compatible devices. The site now advises its customers who have purchased tracks to back them up, as they will not be able to download them again once Virgin Digital has closed. It’s unclear whether the purchasers of individual tracks will be able to access their songs without burning them to CD and reimporting them as MP3s, but it’s better to be safe than sorry if you’re one of those customers. And naturally, subscribing members will lose access altogether once their subscriptions lapse.

DRM-crippled suppliers treat me like a criminal. That turns out to be a self-fulfilling prophesy. It’s precisely because of the DRM that I resort to using peer-to-peer networks or other illicit means of music acquisition.

Make no mistake, the design of the iTunes music store trumps Amazon on just about every level. For most of the purchasing process, the user experience is far superior on iTunes. But the user experience doesn’t end with a financial transaction. The user experience of interacting with the purchased song continues long after leaving the store.

I haven’t bought anything from the iTunes music store because of the DRM. I have used it though: I’ve been given gift certificates for iTunes downloads. This is what I have to do after completing a download:

Pull out the read/write CD I keep just for this,

Burn my new music to the CD,

Rip the music back as MP3,

Erase the CD in preparation for step 1.

And that’s perfectly legalallowed by the terms of service*. But I can’t just convert from DRMed AAC straight to MP3—that would be illegal.

Now, it’s pretty clear that this kind of “copy protection” isn’t going to get in the way of anyone who seriously wants to make copies of the music. All it does is place frustrating stumbling blocks in the path of legitimate customers who want to listen to their purchased music wherever they choose.

I hope that the launch of the Amazon MP3 store is a sign that record companies are finally beginning to realise that people who want their music to be open and portable aren’t criminals—they’re music lovers.

Given the Amazon MP3 Store’s audio quality, prices, and user experience, I can’t see why anyone would buy DRM-restricted music from iTunes that’s available from Amazon.

In a wonderful twist, the current number one bestselling song on Amazon is 1234 by Feist— the very song that Apple uses to promote the iPod Nano. And why not? iPods and MP3s have always been a great combination (it always frustrates me when I read reports by lazy journalists that contain statements such as “only songs purchased from Apple’s iTunes music store can be played on the iPod”). I suspect that the vast majority of iPods are filled with un-DRMed music, mostly ripped from CD. Now, thanks to Amazon, there’s also an easy way to fill them with un-DRMed music downloaded from the tubes of the internets.

* Matthew points out that back-ups, archiving, shifting format, all currently illegal in the UK. Here’s the petition to change that. Even the government agrees that the current situation is pretty stupid but the law hasn’t changed.

Amazon’s new S3 service looks very interesting indeed. At first glance, it just looks like a very cheap way of storing and retrieving files — which it is — but the really fascinating aspect is that there is no user interface. It is purely a web service. As Sam Newman says:

When you get down to it, Amazon S3 is simply a large, distributed hash map with an API. Unless people build applications on top of it, it’s useless.

The creators of S3 have gone out of their way to keep the architecture as simple as possible. This is a smart move. I’m a great believer in the power of stupid networks.

Leaving aside the underlying technology, S3 is good news in purely practical terms. If nothing else, this should start a price war for data storage. Yet another barrier to entry has been lowered for anyone looking to publish anything online. Odeo and YouTube are good for audio and video respectively, but the agnostic nature of S3 means that you can store and stream on your own terms.

Hardware has been getting cheaper and cheaper for some time. Now it looks like bandwidth is heading the same way (for some amusing anecdotes on bandwidth issues, be sure to listen to Bernie Burns’ keynote from SXSW).

I’m looking forward to playing around with S3. For a service with no face, it sure looks like it’s got legs.